United accidentally offers transatlantic first-class flights for $75

If a deal seems too good to be true, it probably is, at least for United customers.

According to a Bloomberg report, the Chicago-based airline has voided the tickets issued to thousands of customers who bought them at incredibly cheap prices online. The tickets were priced cheaply due to a glitch in the pricing software. For instance, a first-class ticket from Newark, N.J., to London went for just around $75. On the United website right now, a first-class ticket for that route is going for more than $5,000.

In order to get the low rate, customers had to take a series of steps, the story notes, including saying they were in Denmark.

“United is voiding the bookings of several thousand individuals who were attempting to take advantage of an error a third-party software provider made when it applied an incorrect currency exchange rate,” Rahsaan Johnson, a spokesman, said in an e-mail to Bloomberg. He noted that United filed its fares correctly.

Requests for further comment from United UAL by Fortune received no immediate response.

This isn’t the first time for this type of event, Bloomberg notes. In the past, airlines have actually allowed passengers who got cheap — or even free — flights to keep their tickets, the report said.

Startup SendMyBag launching a domestic U.S. service

Starting sometime in the first quarter of this year, U.S. airline passengers will have a new option to avoid waiting in line at baggage carousels.

SendMyBag, a Northern Irish startup launched in 2011, is adding U.S. domestic flights to its list of services. Currently, American flyers can only use the door-to-door baggage delivery company when flying to another country.

Here’s how the service works: Users pay a base fee for luggage of any size, but they pay extra if they go over a specified weight limit (a small fee per pound that’s assessed during the transaction), rather than the sometimes large fees charged by airlines. SendMyBag picks up your luggage at your home and delivers it to your destination, whether that’s a hotel or another private residence.

Company’s founder and CEO Adam Ewart is looking to profit from a growing pain point for U.S. travelers. He recently told TechCrunch that he thinks baggage fees in the U.S. will soon reach $4 billion a year, up from $400 million a few years ago.

SendMyBag already offers a domestic service in the U.K. and some European countries. It also flies bags around the EU and to countries such as Australia, Brazil and China. In the 15 months prior to opening its U.S. office last year, SendMyBag shipped 100,000 pieces of luggage, according to Ewart.

Adding a domestic U.S. service to its menu of options will allow SendMyBag to go after customers on low-cost carriers that don’t offer a free checked bag, Ewart said. He noted that JetBlue JBLUannounced late last year a new tiered ticketing system where the lowest tier doesn’t offer any free checked bags. That’s different from the transatlantic flights SendMyBag currently services out of the U.S., where at least one free checked bag is still generally offered; customers who use SendMyBag on the way out of the U.S. are generally just looking for the convenience of being able to avoid baggage claim, he said.

When the new service is launched in the next month or so, the base price will be $45 for a small or medium suitcase, Ewart said.

Southwest to pay record $1.6 million fine for airplane delays

This post is in partnership with Time. The article below was originally published at Time.com.

By Eliana Dockterman, TIME

The Transportation Department has fined Southwest Airlines LUV a record $1.6 million for delays involving 16 aircraft at Chicago’s Midway Airport last January.

The airline was penalized for violating tarmac rules and forcing passengers to sit in planes on the tarmac during the delays. Tarmac rules stipulate that airlines must offer passengers the chance to deplane within three hours of arrival, but Southwest did not offer their customers that opportunity.

“Airline passengers have rights, and the Department’s tarmac delay rules are meant to prevent passengers from being stuck on an aircraft on the ground for hours on end,” U.S. Transportation Secretary Anthony Foxx said in a release.

The department added that Southwest’s violation of the rules caused even more plane delays for other airlines, hence the large fine.

The federal government began cracking down on tarmac waits in August 2010, imposing fines of as much as $27,500 per passenger for delays longer than three hours. American Eagle Airlines was fined $900,000 the following May.

You’re probably taking more business trips this year

If you travel a lot for business, you might be racking up a lot more miles in the air in 2015.

Business travel spending is expected to increase 6.2% this year, according to an annual report released Tuesday by the Global Business Travel Association, a trade group for the corporate travel industry.

“This is especially important, given that US business travel spending is a good indicator for the direction of the U.S. economy,” the GBTA said in a statement.

The report comes just days after a series of terror attacks in Paris that threatens travel to Europe, a hot spot for tourists and business travelers alike. However, Fortune spoke with a variety of travel experts who suggested that any impact wouldn’t last for long and that business would essentially continue as usual thereafter.

The association expects the volume of trips globally to increase 1.7% this year to 490.4 million trips in 2015. There were an estimated 482.4 million trips in 2014, a 1.4% growth over the previous year.

Last year saw a 6% increase in business travel spending, a welcome sign after the recent struggle during the financial downturn. The report called 2014 a “comeback year for international outbound business travel” after a meager 1.1% increase in 2013 and a 1% decline a year earlier.

The report predicted, too, that steeply declining oil prices could be a boon for the travel industry in 2015 because of potentially cheaper airfares.

“Oil prices have plunged since June, creating favorable conditions,” according to the GBTA.

Also helping to drive an expected increase in travel is an improving U.S. economy and greater profits for business in 2015. The more growth and profits, of course, the more travel.

Additionally, the U.S. dollar is gaining strength, while the global economy remains weak, according to the report. “By way of a small silver lining, however, a rising dollar also makes international outbound business travel less expensive.”

United Airlines, Orbitz in legal brawl with 22-year-old travel entrepreneur

This story is in partnership with Entrepreneur. This post was originally published at Entrepreneur.com

By Geoff Weiss, ENTREPRENEUR

United Airlines and Orbitz have teamed up to file suit against a 22-year-old entrepreneur whose airline ticketing startup, Skiplagged, operates according to a thrifty booking ploy known as ‘hidden city’ ticketing.

This means that passengers purchase tickets for indirect flights with the intention to disembark at their layover destinations. Say you want to fly from New York to Chicago, for instance: it could be cheaper to take an indirect flight to Los Angeles and then get off at the Chicago layover.

While hidden city ticketing only works when travelers purchase one-way tickets without any checked baggage, notes CNN, this often represents the cheapest option.

Enter United Airlines and Orbitz — both of whom are alleging “unfair competition” and demanding $75,000 in lost revenue. Hidden city ticketing is prohibited by United Airlines because of “logistical and public safety concerns,” according to the suit.

Skiplagged’s founder, a New York City computer whiz named Aktarer Zaman, told CNN that he expected a lawsuit would be inevitable despite the fact that his site hasn’t yet turned a profit.

“[Hidden city ticketing] has been around for a while,” Zaman told CNN, noting that he was merely exposing a decades-long inefficiency within the airline industry. “It just hasn’t been very accessible to consumers.”

In order to fight the lawsuit, Skiplagged has thus far raised $16,718 of a $20,000 GoFundMe campaign. “As a 22-year-old with a startup being bullied by these large corporations, your support means so much to me,” Zaman wrote in a message to donors.

JetBlue to add new bag fees, cut legroom in planes

Things might be getting a bit tighter in JetBlue’s cabins — and a little bit pricier for those looking to check bags.

The airline announced today that it is looking to add 15 seats to all of the Airbus A320 planes in its fleet. This would reduce the seat pitch — the distance from any point on one seat to the exact same point on the seat in front of it — from 34.7 inches to 33.1 inches. That’s not good news, but it’s still more room than many of JetBlue’s JBLU competitors. Virgin Atlantic, for example, has a seat pitch of 32.6 inches, while Southwest’s LUV is just 31.3 inches. The extra room will let JetBlue increase the number of seats in its planes from 150 to 165. There are currently 122 A320s active in JetBlue’s fleet, according to ch-aviation.

According to a slide deck from JetBlue’s investor day today, this means investors can “expect annual incremental operating income of $100 million by 2019.” The new seats will also feature bigger seat back screens, more entertainment options, and power ports. The retrofitting of the A320’s will start in the third quarter of 2016 and will take about two years.

In addition to the new seats, there’s also a new pricing scheme coming for the airline. There will be three tiers: the first allow for no checked bags; the second allows for one bag; and the third allows for two. The tiers will be branded “Better,” “Even Better,” and “Best” (JetBlue has not yet disclosed prices for each new tier). In addition to the checked bags, the three “fare families” will have different benefits and will pay out different amounts of TrueBlue points per dollar.

Sam Jain’s CheapOair is really taking off

It’s one of the paradoxes of modern shopping: Customers crave the round-the-clock convenience and low price of buying online—except for when they desperately want help from a human being. That, in a nutshell, is the combination that Sam Jain captured when he created CheapOair. The formula has worked: It is the largest independently owned online travel agency (OTA) in the U.S., ranking No. 4 in domestic gross bookings—$3.5 billion last year—after Expedia, Priceline, and Orbitz. Unlike its rivals, CheapOair focuses on air tickets rather than chasing the higher margins of hotel bookings. Its algorithms seek out rock-bottom fares, often by using multicarrier itineraries. An immigrant from India, Jain, 42, came to the U.S. at 19, built a travel business, and then had to start all over again when his industry shifted to online booking. His story:

I grew up in New Delhi, the youngest in a fairly traditional Indian family. I come from a family of entrepreneurs, so a business career was expected of me. From the time I was 14, I would help in my father’s office with small chores. The value of hard work was part of my upbringing.

In 1990 I went to the University of Delhi for a year and a half, then quit. Back then most Indian families like ours knew that the kids would end up running the business, so parents didn’t encourage their children to go to college. It has changed now, and I want my kids to finish their education. But I was 19 then. There was so much action happening in the real business world, and I wanted to be part of it.

My dad and I decided that I would go to the United States. He had a jewelry export business then, and getting into the U.S. market was the next opportunity for growth. I was to set up an office in New York, and I was extremely excited about going there on my own.

It was February 1992, and the two countries were very different. Back then it took seven years to get a telephone in India. In the U.S. I was blown away at getting a phone in a matter of days. Everything moved faster here, and I had to adjust to the new culture, especially in Manhattan, which was a different world—fast-paced, with beautiful architecture, and a culture with hardworking people.

Unfortunately, between the Gulf War and the recession, it was a bad time to be starting a jewelry business. When things didn’t work out, I started helping some friends who owned a home-based travel agency and learned the business. Back then small, minority-owned travel agencies did a lot of business with ethnic communities: the Indians, Greeks, Chinese. People would buy plane tickets from people they trusted.

There was no automation, and travel agents would have to look through reams of paper with fare codes, rules, and restrictions before they could quote a fare. It was very cumbersome. I saw this large-volume business being managed in an inefficient way and thought, Since we’re working with 200 airlines, why not automate things? That would guarantee finding the best price for the customer.

Photo courtesy Sam Jain

I didn’t know how to create a database, so I gave a software development team in India specifications for what was needed. It cost less than a thousand dollars to develop the system. When my friends with the travel agency decided to return to India, I thought it would be great to start my own business with what I had learned.

So in 1994 I launched FareBuzz with personal savings and a little money from my dad. I rented an office in Midtown Manhattan for $500 a month, bought and assembled furniture from Staples, and found a secondhand phone system. To keep the initial investment low, I did everything myself, right down to sweeping the floors.

I aggregated negotiated airfares from wholesalers and sold them to retail agents. The agents did the bookings, and I’d process the payments and do the rest of the back-office work for them. The system I developed streamlined the wholesale ticket fulfillment business and saved time in giving customers fare quotes.

I loved that there was no red tape in the U.S. compared with India. My new company was incorporated in a day; a tax ID took mere days to obtain. These things would have taken months, if not years, in India. A big difference I noticed was the reliance on the latest technology in the U.S. to obtain real-time reports and accounting, where in India the labor is much cheaper and everything was done manually.

That first year, I did about $400,000 in sales and operated at a loss. Anything I made went back into the business to grow the automation, marketing, and processes. I learned the value of retaining customers rather than acquiring new ones. By keeping the customers I had, I lowered the marketing costs and started to make a profit. By the second year FareBuzz was profitable, and I hired my first employee in 1995. It moved fast after that.

A couple of other companies started automating systems and selling the technology to travel agencies, but we kept the system we developed for ourselves. We operated within our means, and I never took on any debt. Traditionally, you don’t take on debt in India.

In the mid-’90s I became a U.S. citizen, and a few years later I got married. The U.S. had given me everything I was striving for, and I wanted to be able to give back. We now work with many charities, including Unicef, Doctors Without Borders, and more.

I think the biggest challenges for immigrant entrepreneurs lie in understanding the American consumer psyche and learning the language of business as a nonnative speaker. You have to be able to communicate effectively to be treated seriously.

We had strong growth until the late ’90s, when our sales were about $12 million. Then it became obvious that e-commerce would be the next frontier. Travelocity and Expedia launched. Everything moved from phone to email, and if you didn’t adapt, you wouldn’t survive. So we decided to build our own Internet booking engine and hired our own engineering team. We also acquired Travelong, which had many corporate accounts and technology that would be a good addition to our own system.

In 2003 we launched Fareportal, a travel-industry technology company that was bootstrapped with limited means compared with our well-funded competitors. It took three years before we could launch our consumer e-commerce arm, CheapOair. At the time, I noticed that none of the OTAs listed a phone number on their websites. It hit me that we should build a model bridging the gap between traditional travel agencies and OTAs, so we put a call-center phone number on every page. Our customers can book online, and we have trained travel agents in call centers to answer questions.

The first day, we sold 20 tickets, and 18 were purchased with fraudulent credit cards. By the time we figured it out a couple of weeks later, it was too late to cancel the tickets. It was both disheartening and a great lesson in e-commerce. So we hired a couple of companies to verify our credit card transactions.

Today, in addition to using third-party vendors and our own proprietary software, we have 60 people calling banks and customers for verification before accepting transactions. It’s crucial: If a sale is fraudulent, we have to pay the airline and take the hit.

As our name says, we cater to the budget-conscious air traveler. When the economy went down in 2008, we grew rapidly because more consumers shopped around for the best deals, which helped new brands like ours. We started designing our mobile app three years ago, and its usage is growing fast.

Over the years we’ve invested heavily in building call centers around the world. Now we have seven locations: two in the U.S., three in Canada, one in the U.K., and one in India. An eighth is planned for the Philippines. Today 87% of our customers are in the U.S., and 13% are from Canada and the U.K.

We work with more than 450 airlines, and last year we hit $3.5 billion in ticket sales. This year we’ll hit $4.2 billion.

LEVELING OFF The share of travel arranged online is still ascending, albeit more slowly than in the past.Graphic Source: PHOCUSWRIGHT

The margins are better with call-center sales than online, so we concentrate on customer service there. When we’ve got a customer on the phone, we cross-sell hotels and rental cars and upsell ancillaries like seats with more legroom. The consumer can save over published fares through the call center on certain international flights, and we get a better commission. So it’s a win-win.

Back in the ’90s I wanted to prove to myself, and to my dad, that I could run a successful business. Today I’m proud to have built a successful organization that provides jobs for so many people. We are one of the fastest-growing air OTAs, but we don’t see ourselves as being in a race with anyone. If we just continue to focus on volume and our core strengths, we’ll continue to grow.

My Advice:Sam JainFounder of Fareportal and CheapOair

CREATE MORE QUIET TIME. When I travel long distances, I fly business class to get peace and quiet. I try not to drink alcohol or watch TV. Instead I take the time to think. A lot of my ideas come from that quiet time.

NIP OFFICE POLITICS IN THE BUD. We initially had power struggles in our call center in India. We don’t micromanage, so we told them, “Deal with your own issues. We’ll find out what’s happening by reading your reports and deliverables.” We had the employees focus on daily performance indicators, so there was no time for office politics.

IGNORE CONVENTIONAL WISDOM. In 2008 everyone was asking, “When are you going to move into the hotel business, which has higher margins than air?” So we started CheapOstay, a hotels-only brand. But after two years it wasn’t making any money. Half our executive meetings were about CheapOstay, and the air business was hurting. So we pulled the plug on the hotel business and lost a few million dollars, but returning the focus to our core strength paid off.

Asia’s richest man punts $2 billion on aircraft leasing

It’s as bold a statement on the future of global air travel as you could wish to see.

Cheung Kong Holdings Ltd, controlled by Asia’s richest man, Hong Kong-based billionaire Li Ka-Shing, is to pay around $2 billion to build a fleet of some 60 airliners that it will lease to the continent’s up-and-coming airlines.

The planes are being bought from a variety of sellers including General Electric Co’s GE GE Capital Aviation Services Ltd.

The move is a play on the long-term outlook for Chinese air passenger growth. The International Air Traffic Association expects global air passenger numbers to double within 20 years to 7.3 billion, mainly due to China, where numbers will grow by an average rate of 5.6% a year.

By the IATA’s estimate, China will overtake the U.S. as the world’s biggest air travel market by 2030, and have 1.3 billion passengers a year by 2034, ahead of the U.S.’s 1.2 billion.

Reuters reported that Cheung Kong is also in talks to buy aircraft being sold by private equity firms including Terra Firma-owned lessor AWAS Aviation Capital Ltd, in an even bigger deal worth about $5 billion.

Both Boeing Corp. BA and Airbus also expect rapid growth in demand from Asia over the medium term, seeing total sales over the next 20 years of between $4.4 trillion and $5.2 trillion.

Company Snapshot

More than 100 million people catch a Southwest flight annually. That makes it the nation’s largest carrier of domestic passengers, beating out rivals like American Airlines, United, and Delta. Known for its customer-friendly ways—Southwest is one of the few remaining airlines that still provide one free checked bag and no change fees—the former regional player has transformed itself into a domestic powerhouse. As other airlines have struggled through bankruptcy filings in recent years, Southwest has kept its low fares and balance sheet intact. The airline has recorded four straight years of revenue gains, and annual sales are expected to be up again in 2014—to nearly $18.6 billion, an all-time high.

The 43-year-old airline isn’t stopping at the border. It expanded beyond the U.S. for the first time this year, though international flights currently account for only 1% of its network. Southwest now flies to the Caribbean and Mexico, routes it acquired from its $1.4 billion purchase of AirTran Airways in 2011, and is considering as many as 50 other international destinations, including potential flights to Canada and Central America. As it extends its global reach, Southwest is staying true to customers: Passengers on international flights are allowed two free checked bags.

NEW LOOK, SAME HEART
By the end of the year, Southwest will complete its integration of AirTran, its largest acquisition ever. Southwest got a makeover last month when it unveiled a new corporate rebranding and paint job for its fleet of Boeing aircraft. The airline revamped everything from its cocktail napkins to employee uniforms. The belly of each newly painted plane features a larger-than-life heart, giving credence to the airline’s motto, “New look, same heart.”

THE SOUTHWEST EFFECT
Cities that Southwest flies into have seen a dual result: Prices drop and passenger traffic booms. The U.S. Department of Transportation dubbed this the “Southwest effect.” The airline ushered in an unprecedented era of affordability, though that has started to moderate, says Stifel Nicolaus analyst Joseph DeNardi. Southwest’s costs have come closer to competitors’, especially after bankruptcy filings wiped out much of the debt of larger rivals. Yet even as Southwest’s cost advantage decreases, its legacy of inexpensive flights remains. “Airfares are still pretty low relative to broader pricing metrics in the economy,” says DeNardi.

FLYING GREEN
Southwest takes environmental awareness seriously and considers it part of its triple bottom-line approach: profits, people, planet. Beginning in 2016 the airline will use low-carbon, renewable jet fuel on select flights in partnership with Red Rocks Biofuels. Southwest was searching “for a viable biofuel that uses a sustainable feedstock with a high rate of success,” says Bill Tiffany, vice president of supply chain for Southwest. Red Rocks passed that standard, meeting both financial and sustainability objectives. Southwest plans to buy up to 3 million gallons of fuel in the first year, the equivalent of roughly 2.1 million flight miles at cruising speed.

How airline loyalty programs seduce and abandon you

Had a nice summer flying on crowded, often-delayed planes and being charged extra for every conceivable service ranging from checked bags to sitting in an exit row to talking to a customer service agent on the phone? Well, at least you earned all those airline miles, as you carefully selected trip routings that permitted you to fly on the airline to which you consistently show your loyalty. Too bad that loyalty isn’t reciprocated.

Airline mileage programs are designed to be psychologically attractive, even addictive, to customers. But as their benefits have decreased, so too has passenger loyalty.

As everyone knows, airlines are free to change their rewards programs whenever and however they want, and they do. Program changes, such as those announced earlier this year first by Delta and then by United, invariably make it harder to earn miles, obtain better seats without paying some upcharge, and require ever more miles to get the free trips or upgrades to premium cabins that travelers seek.

Mileage programs are big business for the airlines, which sell miles to credit card companies and other vendors such as hotels to in turn give away to their own customers. How big is the mileage business? In 2012, United sold $5.1 billion in frequent flier miles compared to $25.8 billion in actual airfare revenue, and there has been talk of airlines spinning off their mileage arms as separate companies. Better yet, airlines get a lot of that money for nothing! For instance, United expects that 25% of the miles that it is selling will never be redeemed.

Complaints about mileage programs are unending. So why do people fall for these tricks?

Mileage and similar reward programs employ several psychological principles to get you hooked. First and most importantly, there are those mileage balances. Such “quantification influences judgment and decision making,” according to research published in 2005 by the journal Contemporary Accounting Research. Using terms such as “balance” and showing you statements with your “balance” causes people to treat even ephemeral assets as though they were real. And nothing is quite as ephemeral as airline miles. Unlike cash, miles can and do expire. And, exhibiting hyperinflation on steroids, miles become worth less each year.

Second, mileage programs send you those cards with your number on them and, at a certain level, luggage tags. The principle here is psychological identification, creating a relationship between you and the airline. Because you carry an airline card, you are a card-carrying member of that company’s loyalty program. You are more closely identified with the airline whose card you hold, and therefore more likely to think well of it.

Third, there are the levels or tiers. You can “earn” (notice the language, as the common psychological expectation is that when you earn something, that something has real value) status. But of course, free upgrades are largely a thing of the past on ever-fuller flights with more people competing for them. Nonetheless, the achievement of higher status levels hangs like a proverbial carrot in front of the horse—you—to induce you to try and achieve something that is of limited value.

My advice: wean yourself from the idea that your airline mileage balance is like a bank account with actual value—it isn’t. Stop identifying with a company that probably is providing ever worse service at ever-higher prices. Cease showing loyalty to an entity that is not reciprocating your love. And stop trying to concentrate your trips on one carrier for the dubious privilege of learning that the many supposed advantages of elite status get reduced almost every year. Instead, book each trip with a psychologically clean slate. Find the best combination of seat, route, and price each time you travel.

If and when you heed this advice, you will be just doing what the most sophisticated travelers already do. As a report by Deloitte on airline loyalty programs noted, only 40% of business travelers fly at least 75% of their air miles on a single airline. Many frequent travelers belong to two, three, or even four airline rewards programs. After the airlines consistently made rewards programs less attractive, some people have wised up and resisted the psychological tricks. That leaves mileage programs with diminishing value both to travelers and to the airlines, which now must confront reduced customer loyalty. Better use—or in the case of airlines, sell—those miles while you can.

Jeffrey Pfeffer is the Thomas D. Dee II Professor of Organizational Behavior at the Graduate School of Business, Stanford University. His latest book, Leadership B.S.: Fixing Workplaces and Careers One Truth at a Time will be published in September 2015 by HarperCollins.